Lebanese heroes who gave their lives on the altars of the nation also taught us that he who has faith in the nation, in liberty, and in the rights of its citizens will defend them with absolute vigor and most Honorable dedication, and will not fear any threats, threat of oppression, the loss of position or Property, or the disappearance of "Thyself" in a Fiery Syrian/Israeli Car BOMB, with CIA2's Blessing...aiding, abetting, covering-up, re-inventing disinformation to muddy the waters...

Thursday, October 29, 2009

Next time you see a junkie sprawled at the curb in the downtown of your nearest city, or read about someone who died of a heroin overdose, just imagine a big yellow sign posted next to him or her saying: “Your Federal Tax Dollars at Work.” {more - dave lindorff}

When we think of the international drug trade, we usually think of financial support being funneled to Columbian insurgents or Taliban fighters. Propping up the world banking system is not what usually comes to mind. However, the illicit drug trade may in fact be one of the world’s few growth industries at the moment, with little unemployment, maximum profits, and a plethora of cash-hungry banks ready to lend a hand.

The head of the United Nation’s Office on Drugs and Crime said that profits from the illicit drug trade were being used “to keep banks afloat in the global financial crisis,” Reuters reported last week. In an interview with Profil, an Austrian news magazine, UNODC Executive Director Antonio Maria Costa warned that “in many instances, drug money is currently the only liquid investment capital.” Costa’s Office on Drugs and Crime uncovered evidence that “interbank loans were funded by money that originated from drug trade and other illegal activities,” Costa said. “There were signs that some banks were rescued that way.”

Specifically, Costas said interbank credits have been financed by drug money. “It is naturally hard to prove this, but there are indications that a number of banks were rescued by this means.” While most banks have money laundering rules in place, “now criminals stash their funds in cash sums which can be up to hundreds of millions of dollars.”

Viewed from a macroeconomic perspective, drug money represents scarce investment capital for banks. “In many instances,” Costa said, “drug money is currently the only liquid investment capital to buy real estate, for example.”

Costa would not name any countries or banks which may have been involved. He did note that the current global financial crisis was a “golden opportunity” for crime groups needing to launder money, and that the laundering of illegal funds was “certainly happening across the board,” Veronika Oleksyn of AP reported. Costa said the information came from contacts with prosecutors and banking representatives in various countries.

Costa also told the BBC that South American drug trafficking threatens to economically destabilize Mexico, Central America, the Caribbean and West Africa. He estimated that the worldwide illegal drug economy was now worth about $323 billion per year. “If you look at agriculture markets, it is the most important,” according to the Drug War Chronicle account of the Profil article. “According to our calculations, the wholesale value of illegal drugs is more than $90 billion, in the range of world meat and grain trade. The street trade we access at a volume of over $320 million.” {source}

The Afghan drug trade is the big money maker. Don't expect any change in that even if Karzai is ousted. Irish4Palistine speculates that the outing of Karzai's brother as a CIA asset is just a game of 'change' where everything will remain the same.

Ha’aretz has courageously and repeatedly exposed the deceitfulness of this and previous Israeli governments’ pretense that their goal is to find a viable Palestinian peace partner. It is therefore important to guard against the implication of the question - whether Israel should engage Hamas in peace talks - posed by the paper, namely that Israeli governments have had an interest in holding peace talks if only they could find a willing partner. Time and again, when presented with a choice between peace and continuing Israel’s expropriation of Palestinian land, Israeli governments have chosen land over peace. Indeed, an American president who shows the slightest signs of taking peacemaking seriously is immediately suspected - not only by Israeli governments but by Israel’s public - of anti-Israel, if not anti-Semitic, motivations.

Israeli governments have avoided dealing with Hamas not because they fear that engaging the organization might not produce a peace agreement, but because they know they could not manipulate Hamas the way they have been able to manipulate Palestinian President Mahmoud Abbas - namely, by using content-less peace talks as a fig leaf for the continued expansion of the settlement enterprise. Israeli governments have latched onto Abbas as their peace partner of choice not because of his “moderation” - his conditions for a peace agreement are not much different from those of Hamas (after all, Hamas has agreed to allow Abbas to conduct peace talks on behalf of a unity government) - but because negotiations with Abbas shield them from the need to deal with Hamas while at the same time enabling them to claim that he is incapable of delivering popular support for the compromises he needs to make. It is a classic case of having your cake and eating it too.

If an Israeli government were truly interested in reaching a peace accord that would end the occupation and establish a viable Palestinian state, it could do so only with a government that includes both major Palestinian political parties, Hamas and Fatah. It is precisely because Israeli governments know this that they have consistently incited Fatah to engage in fratricidal conflict with Hamas, and threatened to cut off the perks extended to Abbas and his colleagues should he even think of joining it in a unity government.

Undoubtedly, this view of Israel’s various governments, and particularly of Prime Minister Benjamin Netanyahu’s government, may be dismissed by some as overly harsh. After all, didn’t Ariel Sharon seek to reverse his earlier rejectionism by turning Gaza back to the Palestinians, and did not Hamas repay his good intentions with rocket assaults on Israel’s civilian population?

The answer to both of these questions is “No.” No, Sharon did not intend the removal of the Gaza settlements to reverse Israel’s settlement enterprise in the West Bank. Its purpose was the exact opposite: to obtain president George W. Bush’s consent for the deepening and widening of Israel’s hold on the West Bank. And no, Hamas did not send rockets into Sderot - a war crime no matter what their purpose - in order to repay Sharon for his generosity, but in response to the prime minister’s strangling of Gaza, also a war crime.

The man in Israel best qualified to know exactly what Sharon had in mind is Dov Weisglass. He was not only Sharon’s closest confidant, political advisor, personal lawyer, and chief of the Prime Minister’s Bureau, but also the one who negotiated the deal with the United States over the removal of the Gaza settlements on behalf of Sharon. Here is how Weisglass described that deal, in an interview in Ha’aretz:

“What I effectively agreed to with the Americans was that part of the settlements [i.e., the major settlement blocs in the West Bank] would not be dealt with at all, and the rest will not be dealt with until the Palestinians turn into Finns.... The significance [of the agreement with the United States] is the freezing of the political process. And when you freeze that process you prevent the establishment of a Palestinian state and you prevent a discussion about the refugees, the borders and Jerusalem. Effectively, this whole package that is called the Palestinian state, with all that it entails, has been removed from our agenda indefinitely. And all this with [President Bush’s] authority and permission... and the ratification of both houses of Congress.”

That is why the first question should not be, “Should Israel talk to Hamas?” but rather, “Should Israel be allowed by the United States and the international community to continue its settlement enterprise to the point of irreversibility?” Netanyahu has already broken his promise to President Barack Obama regarding a limited moratorium on construction outside the settlement blocs. Construction in those settlements continues stealthily. An appropriate response to this continuing deceit would be an American engagement with Hamas, conditioned on Hamas’ implementation of its promise to allow Abbas to negotiate a peace agreement on behalf of a unity government. This would be a clear indication by the United States and the international community that the answer to that first question is “No.”

Henry Siegman is director of the U.S./Middle East Project and a former national director of the American Jewish Congress and of the Synagogue Council of America.

Unless former Sen. George J. Mitchell, President Obama's special Middle Eastern envoy, is prepared to commute by government executive jet for the next five to 10 years, this isn't a bad time to turn in his badge.

Israel's vice prime minister and minister for strategic affairs in Israel's 32nd government Moshe Ya'alon talked his way through Washington's corridors of power this week, spelling out the Jewish state's refurbished negotiating posture for a Palestinian state. Bottom line: The Nobel Peace Prize will not help Mr. Obama's quest for an independent homeland for the Palestinians by the end of his first term. Even if re-elected, the geopolitical prize would most probably elude him again.

Israel wants to slow down the whole process of negotiations with the Palestinians. Mr. Obama wants both parties to accelerate. But Congress seldom allows any daylight between Israeli and U.S. positions.

Israel has scuttled its from-the-top-down negotiating strategy that had Mr. Mitchell meeting with Israeli and Palestinian leaders who then mouthed platitudes until their next meeting. The new posture is what Israeli topsiders call from-the-bottom-up. In other words, you start with itemized minutia, for which Mr. Mitchell's good offices would be a waste of his manifold talents. Key topics like final borders, the return of refugees, the dismantling of Israeli settlements, the status of East Jerusalem, a security fence along the Jordan River against terrorist infiltrators from Jordan - all would be postponed sine die.

The ostensible reason for the change is the refusal of Palestinian interlocutors to recognize Israel as a Jewish state, a national home for Jews from anywhere (there are about 15 million in the world, including 5.5 million in Israel, 6 million in North America, 2.5 million in Europe and Russia).

Instead, the Israelis want to talk about the details of a truly demilitarized Palestinian entity. Haggling over the number of guns and ammo depots allowed for a non-army military with non-army uniforms would keep negotiators busy for months. Air rights would be disallowed by Israel. But Palestinians want small commuter aircraft that would fly to Amman, Jordan and Damascus, Syria. Israeli settlements now sit astride the West Bank's water aquiver. Palestinians want their share. This would entail dismantling part of the $2.5 billion wall-fence-razor wire that snakes 420 miles in and out of the West Bank. That, too, could stretch months into years.

The more Prime Minister Benjamin Netanyahu and his Likud hard-liners think about the strategic dimension of an independent state, the more they conclude it would be a victory for Muslim radicals. Hamas, the radical Palestinian organization that now rules Gaza, is entirely dependent on Iran's Revolutionary Guard-cum-Mullah regime. It also has a strong underground in the West Bank.

As Gen. Ya'alon adjusts his geopolitical specs, he sees nothing but 360-degree trouble for Israel. A revanchist Palestinian state on its borders, staring wistfully at Israel's Mediterranean border, which was once Palestine's, could quickly morph into a hostile entity. Israel's strategic thinkers also see the Sunni-Shia conflict rearing its ugly face in Iraq, Iran, Saudi Arabia, Lebanon and Yemen. On the mental map, the laser pointer traces an axis of trouble from Afghanistan to Pakistan to Iran, to Iraq, to Egypt, Sudan, Somalia.

The ruling Likud Party sees the entire region divided between "Jihadis and moderates," with radical Islam aligned against the West, a struggle that started with Islamist revolutionaries seizing power in Iran in 1979. Western civilization, say Israel's leaders, is the jihadis' "main enemy." So further territorial concessions in the West Bank, they now conclude, merely empowers jihadis. This alone should convince Mr. Mitchell that he is embarked on mission impossible.

As proof of their latest arguments, Likud leaders say moderate Arab leaders' recognize the main threat to their region is Iran, not Israel. So the core of the Mideast problem is Iran and its nuclear ambitions, not the Arab-Israeli dispute. They hope for tougher sanctions between now and the end of the year. They see the Iranian regime a shambles with the Revolutionary Guards struggling to keep control against the "twitter" revolutionaries. And if Tehran hangs tough into 2010, Mr. Netanyahu plans to reassess the military option - with or without the United States.

For the first time, Israeli leaders concede privately Iran does indeed possess formidable asymmetrical retaliatory capabilities that go from mining the Strait of Hormuz, interrupting 25 percent of the world's oil flow, to mayhem up and down the Gulf, all of which could shoot oil up to $300 or more and plunge Western economies into an outright depression. But they also believe the U.S. Navy would quickly demine Hormuz and silence Iranian missile batteries firing at U.S. warships.

This, of course, would bring the United States into open conflict with Iran. And while Mr. Obama might hesitate to be cast as Israel's only ally in a regional war, Congress would quickly lend support to Israel.

Israel's leaders were stunned by the Goldstone report, commissioned by the U.N., on the Jewish state's 2008 assault on Gaza in which almost 1,400 Palestinians, including 900 civilians, and only 13 Israeli soldiers were killed. Richard Goldstone, the South African Jewish jurist who led the investigation and authored the U.N. report, accused Israel of war crimes and crimes against humanity. Predictably, he was quickly tagged as a "self-hating Jew." But he is one of his country's most respected personalities, at the forefront of the struggle against apartheid and a key legal architect of the new South Africa.

All of which has led some to speculate the two-state solution for the Palestinians and Israel has gone the way of the dodo. Former U.N. Secretary-General Boutros Boutros-Ghali told this reporter in Cairo last week, "This is now headed for a one-state solution. But it's probably 10 years away."

Does all this mean that Israel has a historically short "shelf life"? Said one ranking Likud official, "We've had 100 years of Zionism, 62 years as a Jewish state, and we're now 6 million. With what we've achieved in science, agriculture, the military, we're not about to disappear."

Following the recent agreement announced by the International Atomic Energy Agency’s chief, Mohammad ElBaradei regarding Iranian Uranium enrichment, Israeli Defence Minister Ehud Barak called on the international community “to give Iran a deadline for halting its nuclear program and impose additional sanctions against Tehran”. For some reason the Israelis are convinced that Nuclear energy is a ‘Jew only property’. The Jewish state insists on keeping its neighbours in a state of nuclear panic alert.

Tzipi Livni, another dedicated warmonger, is now an enthusiastic supporter of the ‘Two State Solution’. “Establishment of a Palestinian state is the only way of preserving Israel's Jewish character”, she said. At last, the Left and right Wing Zionists are in agreement with each other. Someone should remind the ‘born again dove’ Livni that the Jewish state she refers to is located on stolen Palestinian land, Tel Aviv, Be’er Sheva and Haifa and are all part of occupied Greater Palestine.

Interior Minister Eli Yishai of Shas (an Israeli religious party) blamed the Palestinians for the stalemate in the Israeli-Palestinian negotiations. “Unfortunately, the other side [Palestinians] lacks the ability to make brave decisions,” he said.

Minister Yishai is absolutely right. The Palestinians are not ‘brave’ enough to agree to live in concentration camps, they do not agree to the occupation of their land either. These facts take the Jewish leadership by total surprise. I’ll tell you why. The history of the Holocaust teaches us that the Jewish leadership at the time was actually very willing to collaborate with the Nazis all the way through. In fact it was the Judenrate* that managed and organised the mass deportation of European Jews from the ghettos to the camps. To follow Yishai’s logic, unlike the Palestinians, the Nazi era Jewish councils were taking some brave decisions. Seemingly the Palestinians are not ‘brave’ enough to do the same.

Even President Obama engaged himself with issues to do with the Jewish future. Here is his message to the conference:

"The American people and the Israeli people share a faith in the future, a belief that democracies can shape their own destiny and that opportunities should be available to all"

The only question to be asked here, is whether President Obama meant ‘opportunities for all’, or did he mean opportunities for Jews only? As far as Nuclear energy is concerned, already in June President Obama reiterated that Iran has some “right to nuclear energy provided it takes steps to prove its aspirations are peaceful”. I would urge Obama to accept that opportunities for nuclear weapons should also be ‘available to all’. Not just the Israelis but every country in the region. In order to be consistent Obama has to choose between either clearing Israel of its pile of WMD or otherwise encourage every other country in the region to pile up nuclear bombs just to restrain Israel's proven murderous inclinations by power of deterrence.

However, far more crucial at this stage is to urge Obama to make it clear to the Israelis that by saying ‘opportunities should be available to all” he refers also to Palestinian children who are starved and slaughtered by the Israeli armed forces on a daily basis.

By now, after ten months in office, President Obama should grasp that the notion of ‘opportunities to all’ is not just foreign but in total opposition to the philosophy of the Jewish state, an apartheid racially orientated state

* Judenräte (singular Judenrat; for "Jewish council") were administrative bodies that the Nazis required Jews to form in the German occupied territory of Poland and later in the occupied territories of the USSR.

Sunday, October 11, 2009

As a culture, the current mix of generations, especially in the US, has made some choices. Choices which, in hindsight, leave the adult in us asking, “What were we thinking?”

We made a series of bad choices and suffered the credit crisis because of it. Now, as a nation, we are in the middle of making an even worse choice, one that will leave us with no good choices - only choices of pretty bad to awful. Let’s begin with a quote from a recent client letter by my friends at Hayman Advisors (in Dallas).

“Western democracies, communistic capitalists, and Japanese deflationists are concurrently engaging in what may be the largest, global financial experiment in history. Everywhere you turn, governments are running enormous fiscal deficits financed by printing money. The greatest risk of these policies is that the quantitative easing will persist until the value of the currency equals the actual cost of printing the currency (which is just slightly above zero).

“There have been 28 episodes of hyperinflation of national economies in the 20th century, with 20 occurring after 1980. Peter Bernholz (Professor Emeritus of Economics in the Center for Economics and Business (WWZ) at the University of Basel, Switzerland) has spent his career examining the intertwined worlds of politics and economics with special attention given to money. In his most recent book, Monetary Regimes and Inflation: History, Economic and Political Relationships, Bernholz analyzes the 12 largest episodes of hyperinflations - all of which were caused by financing huge public budget deficits through money creation. His conclusion: the tipping point for hyperinflation occurs when the government’s deficit exceed 40% of its expenditures.

“According to the current Office of Management and Budget (OMB) projections, US federal expenditures are projected to be $3.653 trillion in FY 2009 and $3.766 trillion in FY 2010, with unified deficits of $1.580 trillion and $1.502 trillion, respectively. These projections imply that the US will run deficits equal to 43.3% and 39.9% of expenditures in 2009 and 2010, respectively. To put it simply, roughly 40% of what our government is spending has to be borrowed. [Emphasis mine]

“One has to ask whether the US reached the critical tipping point. Beyond the quantitative measurements associated with government deficits and money creation, there exists a qualitative aspect to such a scenario that may be far more important. The qualitative perceptions of fiscal and monetary policies are impossible to control once confidence is lost. In fact, recent price action in metals, the dollar and commodities suggests that the market is already anticipating the future.”

Let me point out that the deficits for 2010 assume a rather robust recovery, and so they could turn out to be much worse, especially if unemployment continues to rise and Congress decides (rightly) to extend unemployment benefits.

The interest on the national debt in fiscal 2008 was $451 billion. Even though the debt has exploded, the interest for fiscal 2009 is down to “only” $383 billion. My back-of-the-napkin estimate says that is over 20% of total 2009 tax receipts. I guess when you take interest rates to zero and really load up on short-term debt, it helps lower interest costs. (More on that future problem later.) http://www.savingsbonds.gov/govt/reports/ir/ir_expense.htm

The fiscal deficits are projected to be about 11% of nominal GDP, which is now roughly $14.3 trillion. The Congressional Budget Office currently projects that deficits will still be $1 trillion in ten years.

Last spring I published as an Outside the Box a very important paper by Dr. Woody Brock on why you cannot grow government debt well above nominal GDP without causing severe disruptions to the overall economic system. If you have not read it, or would like to read it again, click here.

I am going to reproduce just one table from that piece. Note that this was Woody’s worst-case assumption, adding 8% of GDP to the debt each year, and not the 11% we are experiencing today. The Congressional Budget Office projections are now even worse, and that assumes a very rosy 3% or more growth in the economy for the next five years. Under Woody’s scenario, the national debt would rise to $18 trillion by 2015, or well over 100% of GDP, depending on your growth assumptions. Take some time to study the tables, but I am going to focus on 2015 and not the outlier years.

$1.5 trillion dollars means that someone has to invest that much in Treasury bonds. Let’s look at where the $1.5 trillion might come from. Let’s assume that all of our trade deficit comes back to the US and is invested in US government bonds. Today we found out that the latest monthly trade deficit was just over $30 billion, or $370 billion annualized (which is half what it was a few years ago). That still leaves $1.13 trillion that needs to be found to be invested in US government debt (forget about business and consumer loans and mortgages). Killing the Goose$1.13 trillion is roughly 8% of total US GDP. That is a staggering amount. And again, that assumes that foreigners continue to put 100% of their fresh reserves into dollar-denominated assets. That is not a safe assumption, given the recent news stories about how governments are thinking about whether to create an alternative to the dollar as a reserve currency. (And if I was watching the US run $1.5 trillion deficits with no realistic plans to cut back, I would be having private talks too. They would be idiots not to do so.)

There are only three sources for the needed funds: either an increase in taxes or people increasing savings and putting them into government bonds or the Fed monetizing the debt, or some combination of all three.

Now the Fed is in fact monetizing a portion of the debt as part of its quantitative easing program, and US consumers are saving more. Tax receipts are way down. I can tell you there is a great deal of angst in New Orleans tonight about the Fed monetization. This is traditionally a “gold bug” conference, and many of the participants and speakers see only inflation in our future.

Long-time readers know that I think the Fed has been able to get away with its rather large monetization program because of the massive deflationary forces let loose in the world by the credit crisis, which is forcing a monster deleveraging regime all over the world. Where has all the money gone that the Fed has printed? Right back onto the Fed’s balance sheet as bank reserves. The banks are not lending, so this money does not get into the system in the usual manner associated with fractional reserve banking. Until that happens, and is accompanied by increasing wages and employment, inflation is not in our immediate future.

And this brings us to our conundrum. You cannot continue to run deficits significantly larger than nominal GDP for too long without risking the demise of the economic system. Ask Argentina or any of the other nations where hyperinflation occurred, as detailed in the study mentioned above. But we are in a deflationary environment, so the Fed can monetize the debt far more than any of us suppose without risking immediate and spiraling inflation.

But there is a limit to the Fed’s ability to do so without causing real inflation. First, as long as the Fed is independent, at some point they will simply have to tell Congress we can no longer monetize the debt. While I am sure that some of you doubt they would do so, the Fed officials and economists I have been around are pretty adamant about that. There is a line they will not be pushed past. It may be further than I like, but it is there.

The Fed cannot simply buy up all the debt needed to fund the government. Again, no one on the FOMC would either advocate or allow that. That would in fact start us down a very dangerous path rather quickly. Therefore, they must have a large number of willing bond buyers outside the Fed. The good news, gentle reader, is that we will find someone to buy that debt. That is also the bad news. Let’s go back 30 years.

Legend now has it that Paul Volker single-handedly took the inflation bull by the horns and ripped them off. Now, it took fortitude to do that in the face of certain recession and high unemployment. Those were not fun days. But his partner in the deed was the bond market. Bond investors simply demanded higher returns, because they were really worried about inflation.

At some point, if we do not get the government deficit under control, the bond market is once again going to react. Seemingly overnight, real (inflation-adjusted) rates are going to rise, and will do so rapidly. And I am not talking about 1 or 2%. You just cannot have 8% of a $14-trillion GDP go into US government debt every year, forever, at today’s low real rates.

Let’s play a thought game. If you take 8% of US consumer spending and save it, and it finds its way into government bonds, you have reduced consumer spending and therefore the actual GDP. But how about those who want to invest in stocks? Foreign bonds and currencies? New businesses? Loans of all types? How much are we going to have to save to get the necessary capital? How high will the saving rate have to be to finance all those other activities in a world where debt securitization is still anemic?

Some will point to Japan and their government debt-to-GDP ratio, which will soon be over 200%, a far cry from where we are today. Why can’t we grow our debt to 200%? Because the Japanese have long had a culture of saving and investing in government bonds. It’s what you do to support the country. But even they will run into a wall as their savings rate continues to drop, because so many of their citizens are retired and are now selling bonds to finance retirement. They too are running massive fiscal deficits, on the order of the size of the US deficits. And does anyone really want to have two lost decades, like Japan?

How long can we go before there is an upheaval? I don’t know. The markets can remain irrational or complacent for a lot longer than most of us think. It could be years. Or not. Suddenly, it will be July 2008 and the bond vigilantes stampede.

But now, we seemingly can borrow with no consequences. The deflation that is in the air, plus the lack of bank lending holds, down the normal inflation impulses. We as a nation are leveraging ourselves up. We’re partying like it’s still 2005. The music is playing and we are dancing. Our Congress is trying to figure out how to run even higher deficits.

At some point, the consequences will be significant. There are two paths, and it is not clear which one we will take. First, we might see inflation kick in and actual rates rise. Since so much of our national debt is short-term debt, that means yet another rise in the deficit as rates rise. Mortgage rates rise, putting pressure on the housing market. There will be even more pressure on commercial mortgages. Consumer debt will be harder to get and cost more. It will mean funding costs for businesses will rise, and that hurts employment. It would be a return to the 1970s of high interest rates and stagnant growth in a very slow-growth environment.

Second, we could see deflation kick in and, even though rates stay more or less where they are, real (after-deflation) rates could rise as they did in the ’30s and in Japan.

Some of my most knowledgeable friends argue for the inflation side, and others take the deflation side. I tend to think the Fed will fight deflation until we get inflation, but the consequences will not be pleasant. There is no benign path.

How can we avoid such an upheaval? The only way is to make some very difficult choices. There have to be some adults making the choices, as the teenagers now in control clearly cannot make them.

As I have written in the past, we can run deficits of 2% of GDP for a very long time, which in a few years would be about $300 billion. It is my belief that if the bond market and world investors saw a credible plan to put us on a path to a deficit no larger than 2% of GDP, the dire upheaval that is in our future could be avoided.

But that will mean some painful choices. It is not a matter of pain or no pain, it is just deciding when and how bad it will be. The longer we wait, the worse the consequences.

Let’s Play Turn It Around

There are businessmen who are called turnaround specialists. They come into companies that are sick but have a basic competency, and that with the right management can be made into viable concerns. Generally, the choices the new management makes are painful to those involved, but they are necessary if the enterprise is to remain a going concern.

So, for the next few pages, I am going to suggest some things we can do to turn the US around. They are not easy fixes, and I know a lot of readers will not like what they read or will disagree on points. But something like this is going to have to be done, or we risk killing the goose.

First, we must acknowledge the deficit is out of control, and spending must be cut. If we raise taxes by as much as the Obama administration now wants to, we will most assuredly put the country back into a deep recession in 2011. Think what raising taxes in 1937 did to a nascent recovery. A $3-trillion-dollar budget is 20% of the US economy. That is just simply too much.

Quick fact. The most credible studies show that government expenditures exert no multiplier effect on the economy. Actually, they show them to be very slightly negative. This is not just in the US. However, the tax effect has a multiplier of 3! If we raise taxes by $300 billion in 2011, that will slam the economy in the face. Further, we will collect less taxes than projected, as economic activity will fall.

You cannot cure a too much debt problem with more debt. We cannot borrow our way into prosperity. Every crisis of the past decades has been a result of too much debt and leverage and we seem to want to repeat the past mistakes, hoping that this time it will be different. It won’t.

Ok, now let’s play the Turnaround Hammer Game.

+ We should start with a 5% acrossthe-board cut in spending in all programs. Federal employees, except for military personnel, should see a 5% cut in pay as part of that program. The average federal worker makes $75,419 a year, while the average in the private sector is $39,751. The rest of us are taking pay cuts in the form of higher taxes. No cost of living increases, etc. We are on an austerity program and need to do what it takes. If a program is deemed too important to be cut, then another program has to be cut more.

Then the next year another 2.5% cut across the board. And then an absolute freeze on the overall budget size until the deficit is 2% or less of GDP.

+ Social Security must be fixed now. We all know that it is going to have to be done, so why not just do it? Means testing should be a part of the mix. As an idea, for every $10,000 in income a retiree has, he gets $1,000 less in SS payments. And increase the retirement age down the road. When SS was launched, retirement age was 65. But the average life span was 65. There are other things we can do, but whatever our poison of choice is, we need to take it.

+ Medicare must be revised, with real health-care reform. The national debt is $56 trillion if we count unfunded liabilities, much of which is Medicare. It will become a nightmare around the middle of the next decade. Adding more expenses now without cutting elsewhere makes no sense. If we kill the goose, no one will get anything excect very empty promises.

Side note: there actually is a lot of waste in the system. Software should be written that analyzes every patient and procedure and produces an outcomes-based analysis of what is reasonable, rather than throwing every test at every patient. And the government should make sure, even if it has to spend the money, that the updated system is in place in every hospital and clinic in the country. And doctors should be given access to it so they can decide what type of care is appropriate to prescribe. And health-care reform means tort reform.

Today, I got a note from a friend of mine who just had yet another heart attack. It seems his stent is now blocked by 50%. He is a vet, and his primary care is the Veterans Administration. The Veterans Hospital system will not do a procedure to unblock the stent until it is 70% blocked. He does not have any money, so he is simply waiting to have another heart attack. I am really looking forward to government-run health care.

+ Each year we allow almost 1 million immigrants into the US, mostly family of people already here. I suggest that for the next two years we stop that. Instead, let anyone who can buy a home, passes basic screening, and can demonstrate the ability to pay for health insurance immigrate to the US and get a temporary green card. If they behave, then the card becomes permanent after four years.

We almost immediately put a floor on the housing market, absorb the excess homes, and within a year the housing-construction market, along with the jobs that are now gone, will be back. That is stimulus that costs the taxpayers nothing.

+ While I can’t believe I am writing this, taxes are going to have to rise, if for no other reason than this Congress is hell bent on raising taxes. But rescinding the entire Bush tax cuts, plus adding a 10% surcharge as Congress wants to do in one fell swoop, is an absolute guarantee of a recession. So do it gradually over (say) 4 years, and then reinstitute the cuts when the deficit is under 2% of GDP. Remember the negative tax-multiplier effect of raising taxes. And the definitive work on that was done by Obama’s chairman of the Council of Economic Advisors, Christina Romer.

We should consider a VAT tax and a major cut/reorganization of the corporate tax. We need to encourage corporations to hire more, and you do that by taxing less. Let’s make our corporations more competitive, not less. Our taxes are much higher than those of any of our major competitors. And please forget that insane carbon tax. If you want to cut emissions, do it straightforwardly by raising taxes significantly on gasoline. Don’t back-door it on consumers. (And I am NOT advocating such a policy.)

+ An aggressive tax benefit for new venture-capital money that is invested in new technologies will result in new industries. The only way we can grow our way out of this mess is to create whole new industries, like we did in the late ’70s and ’80s. (Think computers and the internet and telecom.)

+ Unemployment is likely to continue to rise and last longer than ever before. We have to take care of the basic needs of those who want work but can’t find it. Unemployment insurance should be extended to those who are still looking for work past the time for benefits to expire, and some program of local volunteer service should be instituted as the price for getting continued benefits after the primary benefits time period runs out. Not only will this help the community, but it will get the person out into the world where he is more likely to meet someone who can give him a job. But the costs of this program should be revenue-neutral. Something else has to be cut.

+ We have to re-hink our military costs (I can’t believe I am writing this!). We now spend almost 50% of the world’s total military budget. Maybe we need to understand that we can’t fight two wars and support hundreds of bases around the world. If we kill the goose, our ability to fight even one medium-sized war will be diminished. The harsh reality is that everything has to be re-evaluated. As an example, do we really need to be in Korea? If so, why can’t Korea pay for much of the cost? They are now a rich nation. There are budgetary fiscal limits to being the policeman for the world.

+ Glass-Steagall, or some form of it, should be brought back. Banks, which are subject to taxpayer bailouts, should not be in the investment banking and derivatives-creating business. Derivatives, especially credit default swaps, should be on an exchange, and too big to fail must go. Banks have enough risk just making loans. Leverage should be dialed down, and hedge funds selling what amounts to naked call options in any form, derivative or otherwise, should be regulated.

Let me see, is there any group I have not offended yet? But something like I am suggesting is going to have to be done at some point. There is no way we can continue forever on the current path. At some point, we will hit the wall. The fight between the bug and the windshield always ends in favor of the windshield. The bond market is going to have to see a credible effort to get back to a reasonable deficit, or we risk a very difficult economic environment. The longer we wait, the worse it will be.

It is not going to be easy to persuade a majority of Americans that we need to do something now. More realistically, we are going to probably have to begin to experience a crisis of some type to get politicians motivated to do something.

This last Tuesday, I spoke to the Financial Leadership Association at the University of Texas at Dallas. It was mostly undergraduates, and my assigned topic was how financial research impacts our investment decisions. In touched on the topic above, in less detail, but pointing out that at some point we are going to have to bring the deficit under reasonable control. I got some push-back, as some could not understand why we just couldn’t keep running deficits, as we simply owe it to ourselves. I tried to explain, but for a few of them I was not getting through (though I think most got it). And these were the finance students! I shudder to think what the sociology department would be like.

We are not going back to normal, although it is likely we will see some form of Statistical Recovery. But we cannot get complacent. Somewhere out there is the real potential for another crisis, which will dwarf the last one. You will not want to be long much of anything when it happens, except hedged or liquid investments. Though admittedly, this could go on for a long time. I just don’t know how long “long” is. Other than it will be too long and then not long enough.

Saturday, October 10, 2009

It took 25 years longer than George Orwell thought for the slogans of 1984 to become reality.

“War is Peace,” “Freedom is Slavery,” “Ignorance is Strength.”

I would add, “Lie is Truth.”

The Nobel Committee has awarded the 2009 Peace Prize to President Obama, the person who started a new war in Pakistan, upped the war in Afghanistan, and continues to threaten Iran with attack unless Iran does what the US government demands and relinquishes its rights as a signatory to the non-proliferation treaty.

The Nobel committee chairman, Thorbjoern Jagland said, “Only very rarely has a person to the same extent as Obama captured the world’s attention and given its people hope for a better future.”

Obama, the committee gushed, has created “a new climate in international politics.”

Tell that to the 2 million displaced Pakistanis and the unknown numbers of dead ones that Obama has racked up in his few months in office. Tell that to the Afghans where civilian deaths continue to mount as Obama’s “war of necessity” drones on indeterminably.

No Bush policy has changed. Iraq is still occupied. The Guantanamo torture prison is still functioning. Rendition and assassinations are still occurring. Spying on Americans without warrants is still the order of the day. Civil liberties are continuing to be violated in the name of Oceania’s “war on terror.”

Apparently, the Nobel committee is suffering from the delusion that, being a minority, Obama is going to put a stop to Western hegemony over darker-skinned peoples.

The non-cynical can say that the Nobel committee is seizing on Obama’s rhetoric to lock him into the pursuit of peace instead of war. We can all hope that it works. But the more likely result is that the award has made “War is Peace” the reality.

Obama has done nothing to hold the criminal Bush regime to account, and the Obama administration has bribed and threatened the Palestinian Authority to go along with the US/Israeli plan to deep-six the UN’s Goldstone Report on Israeli war crimes committed during Israel’s inhuman military attack on the defenseless civilian population in the Gaza Ghetto.

The US Ministry of Truth is delivering the Obama administration’s propaganda that Iran only notified the IAEA of its “secret” new nuclear facility because Iran discovered that US intelligence had discovered the “secret” facility. This propaganda is designed to undercut the fact of Iran’s compliance with the Safeguards Agreement and to continue the momentum for a military attack on Iran.

The Nobel committee has placed all its hopes on a bit of skin color.

“War is Peace” is now the position of the formerly antiwar organization, Code Pink. Code Pink has decided that women’s rights are worth a war in Afghanistan.

When justifications for war become almost endless--oil, hegemony, women’s rights, democracy, revenge for 9/11, denying bases to al Qaeda and protecting against terrorists--war becomes the path to peace.

The Nobel committee has bestowed the prestige of its Peace Prize on Newspeak and Doublethink.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He is coauthor of The Tyranny of Good Intentions.

Sunday, October 4, 2009

The human race must learn to be more than just cattle. We move like a herd, we think like a herd, we are controlled like a herd. We are about to be stampeded into thousands of slaughterhouses, just like the end of all livestock herds.

Perhaps we are more accurately compared to industrious ants in a global ant farm? We are trapped in an enclosed environment by an unseen sadistic hand, which collapses our carefully dug tunnels and incinerates us with magnifying glasses. Many independent ants try to get a glimpse of our tormentors, spending hours speculating about the motives of those who so cruelly command our fate. It is important to our overlords that they identify who all of these free-thinking rebellious ants are, in order that they might be marked and sorted-out for termination.

The masters of our universe always follow this pattern in stamping-out resistance to their immoral plans. The American government has carefully planned for the elimination of all those who resist their master plan to dominate all things on this earth. Through covert operations with code names like Phoenix, Condor and Gladio, they have methodically used torture, terrorism and murder to identify and eliminate all potential left/liberal resistance to its ultra right-wing plans for allied nations.

According to researcher John Dinges, at the center of each of these CIA terror campaigns was a data collection system, used to collect the lists for the death squads to target. The idea was always to use covert agents to artificially stimulate the production of an organized left, in order to identify all those who might one day be compelled to rise in opposition. While the liberal resistance rose-up, the hard-core right (which was a reflection of the US government’s belief system) was massively built-up, waiting for the inevitable day of conflict.

In America today, we see the same game plan being playing-out. When the liberal resistance explodes in reaction to the sight of the slaughterhouse, coming into view, then the herd will be culled, removing all the free-thinking trouble-makers who resist the stampede. To that end, lists have been drawn-up of war-resisters, in preparation for the round-up. The Internet was given to the American people for just that purpose.

The American resisters are self-identifying themselves by their Internet searches and activities, in effect, signing their names to subversive lists every time they surf conspiracy or antiwar sites, or dare to express themselves on any forum. This is the sinister motive behind the seemingly benign creation of the Internet. Every technological innovation in communications is co-opted into servicing the malignant government plans through the insertion of “backdoors” and the secret installation of government software.

The Patriot Act provided the long-awaited opportunity to launch a nationwide dragnet to find the new radicals. Mass surveillance of all the American people was authorized. All phone calls and emails will soon be monitored to compile lists of growing personal networks. This will help the government to identify potential radicals who are not yet politically active, or those who do not use the Internet. All the plans for replacing democracy with the police (martial law, FEMA camps, FISA bill) are steps that have been taken in preparation for the day when the people will justify the use of these fascist measures against them, in reaction to the bombing of Iran, another “false flag” terror attack, a general uprising, or some other undefined “emergencies.”

The Internet itself is the “backdoor” into the most private secrets of every web surfer. Not only is the Internet the backdoor, but it serves as an instrument for subversive agitation, for agents provocateurs to cultivate “extremist beliefs systems,” and the spreading of radicalization, just as the government claims in its public witch hunt, known as the “Homegrown Terrorism Act.” But the real hidden issue, that the grand inquisitors of the homegrown radical hunt will not examine is – how much of the radicalization and the extremist beliefs are the natural products of moral outrage and acts of self-defense, and much of it is the product of secret government agencies’ handiwork, meant to inflame a radical leftist movement?

How much of the division today within the antiwar and anti-fascist movements has been caused by covert disinformation agents, sowing half-true government propaganda? How many of the divisions in the 911 Truth Movement were manufactured by these agents of division? The movement cannot unite around a central issue because every issue has been splintered. This is evidence that the government’s secret plans are succeeding. If we cannot unite around a common understanding of events, including the identification of the real masters of America, before they give that dreaded final order (for us), then there will be no immovable mass of united Americans standing squarely in the path of their incoming irresistible force.

Who are the conspirators? Are the principle powers behind the plot to be described as international bankers, Zionists, Illuminati, or some mysterious combination of all of them, as has been described in detail by former British spy John Coleman, in “Committee of 300”? Elements of all these subversive secretive groups are definitely the financial powers driving the New World Order, but, on another level, they are merely pawns as well, dancing to the tunes of the CIA puppeteers. All lesser conspiracies must be subject to one primary driving group of plotters. Many (if not most) of the conspiracy sites on the Internet are agency creations, serving to divide and mislead the real truth-seekers in a thousand different directions. The right-wing conspiracy against freedom is driven by leftist impersonators.

Many of the sources of new conspiracy theories keep turning-out to have connections to various intelligence agencies, like Coleman, who is alleged to have been a member of MI6. This calls his veracity into question, especially considering that his work largely ignores the Zionist connection to world events, blaming everything on the super-secret “Committee,” that he alone knows the inner workings thereof.

Another questionable source of alternative conspiracy theories was Joe Vialls (a.k.a. “Ari Ben-Menashe,” formerly of the Israeli Mossad). His constant usage of insider information to support his wild theories, such as Israel’s military plans for Iraq’s oil pipelines led many people to question his work. His “Operation Shekhinah” report was validated after the US invasion of Iraq. His report on the Falklands War about gigantic new oil fields was confirmed by recent reports of vast oil fields recently discovered off the coast of Brazil. Vialls later discredited himself with exposes which never came true, like a planned al Qaida attack on the US using airliners spreading ricin, and another called “Fortress America,” which allegedly involved 250,000 Israeli assassins in the United States.

What really destroyed Joe’s credibility with the 911 movement was his attempt to cover-up CIA and Mossad involvement in the attacks, blaming them instead upon the French, the Russians and the Germans. He ignored the obvious fact that America and Israel had wanted the war on terrorism, which the terrorist attacks would justify. His theory was that the attack on the New York financial center was revenge committed upon the Zionist bankers, intended to disrupt their oil pipeline steal underway in Central Asia.

In spite of all of this, Joe Vialls provided invaluable insights into the countless intrigues unfolding around pipelines and oil fields. Just as his information on Iraqi pipelines and South American oil fields proved to be true and very helpful in understanding conspiracy motives in the war on terrorism, his revelations concerning conflict with Russia over Central Asian oil and gas fields help us to understand the benefits to be obtained from our standoff with Putin. As hard as it may be to believe, the continuity of freedom in the Western world may very well rest in the hands of a former general of the KGB.

If Joe Vialls was really a Mossad mole, then why did he base his theories about the Israeli connection to the war on terrorism on the darkest anti-Semitic beliefs, making his work unreadable to a majority of Americans? His theories concerning the inner workings of the conspiracy are worth examining, regardless of how his seemingly racist views on the importance and rank of the Zionists in the plot have been portrayed.

Joe’s version of the conspiracy known as the “war on terror” –

“The Jewish State is a true parasite, wholly dependent on massive American funding in order to survive. Remove that funding either intentionally or accidentally, and the Jewish State would be overrun and destroyed in a matter of months…

So what is a poor parasite to do, when its host appears to be running out of the fiscal nourishment it depends on for its very survival? Most normal parasites would seek out a new host, but this is an impossible task for the Jewish State. There is simply no other country on earth capable of generating sufficient revenue to cope with the greed and corruption in Tel Aviv.”

In Joe’s view, the coming collapse of the American economy would take Israel down with us. It was therefore imperative for both Israel and America that the United States seize the Middle Eastern oil fields and pending pipeline routes, in order to base the American/Israeli economies on this new source of unlimited wealth. Israel was to become the “new Rotterdam,” the hub of oil world, even as Rotterdam was the axis of the world’s diamond market. Despite Vialls’ anti-Israeli views, even though the war on terrorism was exactly what America and Israel desired, he maintained that:

“9/11 was a calculated high-tech surgical strike against the Zionist banking heart of New York City,” [carried-out by the French, Russian and German intelligence services]

It is obvious that Joe Vialls was correct about American and Israeli goals, to seize the oil fields of the Middle East and the Caspian Sea region, in order to pipe this strategic resource away from Russia and China, into American tankers and the strategic reserves that we maintain for Israel. His contentions about the power of “New York (Jewish) money” are also correct. The fascist ethnic-cleansing policies of the Israeli military did provide the bloody template that was to be used throughout the war on terrorism, in order to subjugate and rob the Muslim people. It seems that most of his reporting was usually dead-on, except when he relied on intelligence leaks from inside the Israeli establishment, which then proved to be misinformation.

As far as his most startling claims in “Fortress America,” about the secret army of 250,000 Israeli war veterans being sent to the US, to eliminate the targeted enemies of Israel and the patriot militias, only time will tell, whether he was right or wrong. But we must keep in mind, that America’s radicals and extremists are being targeted to be rounded-up and eliminated by some right-wing force. This hardcore group of right-wing killers may as well be Israelis.

Whether the conspiracy against American freedom, known as the New World Order, is the culmination of an ancient Jewish conspiracy to elevate a group of men who claim to be “God’s chosen people,” therefore God’s representatives upon this earth, or merely an extensive intelligence operation that has co-opted this ancient conspiracy, making it the centerpiece of its plans, is still uncertain. One thing that is certain, is that the writer of these words, and all of you who read these words have been marked for “disappearance,” or termination. In the end, it will matter very little about the nationality of the man who shoves the gun in our faces, for whoever he proves to be, he will surely be an immoral monster.

Elie

It's so easy to forgive, so very hard to forget.....RIP

Elie

It's so easy to forgive, so very hard to forget.....RIP

With my Prayers, For Elie Hobeika

WITH MY PRAYERS, ALONE, YOU WILL REMAIN A"Mystery" in a COMA, and a vegetable Israel's comatose former prime assassinations minister, Ariel BUTCHER Sharon, was moved back to his desert HELL on Friday, leaving the secure hospital ward that has been his earthly HELL for almost five years, ZIOCONS said. Sharon, 82, will continue to receive my death wishes at Sycamore Farm, where as premier he would summon advisers to plan assassinations strategies such as US/Syria/Israel's January 24th 2002 assassination of popular Christian Politician Mr. Elie HOBEIKA...at the hands of Asef SHAWKAT's Goons and the infamous White House Murder INC,..... Felled by a stroke in January 2006, because of my intensive daily prayers....in revenge for the assassination of Mr. Elie HOBEIKA, and he will remain COMATOSE until I release him into a permanent HELL..., the BUTCHER of Sabra Shatila and the 82 Lebanon war left behind an often jittery Jewish state that has since LOST two wars while charting an uncertain course in U.S.-sponsored FAKE talks with the Palestinians.... .

http://hobeika.blogspot.com/

قدر العظماء

قدر العظماء أن يمضوا شهداء
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
"Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all, and that's Elie's Legacy."
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"EVERYTHING you know is "said" to be "WRONG"
"The Truth IS STRANGER than fiction."
"The Truth is ALWAYS the FIRST CASUALTY OF WAR."
"OFFICIAL LIES are ALWAYS the BIGGEST LIES OF ALL."
"The more things change, the more they STAY THE SAME."

Elie Hobeika -

Elie HOBEIKA

RIP all 4 Heroes

وعــــد إيلي حبيقة

وعــــد إيلي حبيقة---------------------

Jesus Christ wants to come into your life.

Only He can be your true satisfaction.

The Bible says that "God so loved this

world (all of us) HE gave His only Son

(Jesus) that whoever believes in Him

should not perish but have eternal life."

To believe in Jesus is to believe that

He is The Son of God and to give

yourself to Him completely.

Read the Bible and pray daily.This is the only way to overcome evil.

Remember there is a Heaven to gainand A REAL HELL TO AVOID.

WE WILL LIVE FOREVER SOMEWHERE.

ONLY THE PRECIOUS BLOOD OF JESUS

CAN CLEANSE AWAY SIN.

May The Grace of our Lord Jesus Christ,

The Love of God and The Fellowship of

The Holy Spirit be with you.

ELIE, Mitri, Walid, Phares.

RIP

HK, Phares, Walid, Mitri.

Lebanese Heroes.

Elie Hobeika - HK. A Lebanese HERO

HK

Elie Hobeika - HK. A Lebanese Hero.

HK

Elie Hobeika

HK

ST

ELIE HOBEIKA

ELIE HOBEIKA

PZ

RC

WIKI

Core2

About Me

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